Discover new ways to save money when in college
 

Welcome to our college savings tips Archive. Have fun browsing!

 

(Browse for more articles)

 

Consignment -- A Sales Adventure

Once upon a timeOnce upon a time, many be supportable on low turnover
years ago there was a young, ambitious items.- Integrity of customer. No matter
salesman selling flat rolled steel. This how thorough your consignment agreement,
energetic young man called on one all such programs involve a high level of
potentially large account for months and trust between parties. How easy are they
months with zero success. He was going to do business with?It is very important,
nowhere fast. The only thing he got from then, to complete a diagnostic review.
the rather large, burly looking The diagnostic review, initiated by your
professional purchasing agent was sales support team, is the first step in
frustration. The purchasing agent knew preparing for consignment. The review
the young salesman was short on involves your entire organization and
experience. The young salesman felt that represents a complete and thorough
the purchasing agent actually enjoyed assessment of the customer's current
watching him squirm month after month. operating environment. It provides the
This young salesman, being enthusiastic base of reference for all future
and energetic, tried every sales consignment activities. It is primarily a
technique he had ever learned. Of course, data collection and operational analysis
the scruffy old purchasing agent was effort which defines the consignment
familiar with every one of them and had opportunities and the challenges that
seen them many times before. Nothing must be met for implementation. It
seemed to work on this guy. The young man includes an assessment
just couldn't reach him. So, he went back of:- Operations- Material Flow- Material
to something very basic that most of us Storage- Organization- Market
in sales (especially we Baby Boomers) RequirementsThe diagnostic review results
learned from day one. The young salesman in a thorough understanding of the
reflected on the words spoken by his most barriers, constraints and opportunities
cherished mentor, "Build a relationship to implementing the consignment
son. Get the man to like you and he'll partnership. It provides the baseline for
tell you how to do business with assessing improvement opportunities and
him."ExpectationsWell, the young man for developing the consignment strategy.
tried and tried, but even that didn't Failure to perform the diagnostic review
seem to work. He was ready to give up. He significantly reduces the probability of
was tired of repeatedly hearing that same success for consignment implementation.
pathetic purchasing agent's theme song, This can often negate any cost savings
"I'm happy with my current suppliers."The generated by the concept itself.Once an
young salesman was not smart enough, did account is determined eligible and the
not have enough scar tissue and was not diagnostic review has been completed,
confident enough to reply, "Maybe that's further development of the rules of
because you have set your expectations engagement include:- Minimum turn
way too low." Instead he resorted to his rate- Number of items to be
secret weapon, his rarely used prideful consigned- Stocking location- Who will do
technique that only came out when all the count- How damaged goods will be
else failed - He begged. "Mr. Customer, handled- What the replenishment cycle
is there anything I can do, anything at will be- What the billing procedure will
all that will convince you to give me a be- What the billing cycle will beOther
chance to do business with you?"Have you criteria that is specific to the customer
ever been in the midst of a sales in question should be added to this
presentation and feel a knockout punch list.JIT on SteroidsConsignment
land on your chin? Well, that's how the partnerships act like Just-in-Time
reply felt to the young salesman. "Look, programs on steroids. They provide all
we have a partnership with our current the benefits of Just-in-Time without the
supplier. The only way you could ever do high transaction cost, purchasing
business with me is if you gave me our management stress and risk of stock
steel for free," the purchasing agent outs.It is extremely important to get as
barked. much specific information as possible
The young salesman was devastated; He directly from the customer. When you do
saw the thrill of victory vanish before your "cost savings analysis" and your
his eyes, as he tasted the agony of final "price is not the same as cost
defeat. He walked away from that call demonstration," you will face less of a
with his tail between his legs. challenge if the bulk of your information
The young salesman was down and comes from the customer, thereby
depressed. He was in one of those typical increasing their perceived accuracy of
valleys anybody who is or has ever been your assumptions.The following
in sales recognizes. The best way to pull information is critical to the success of
ourselves out is to make a buddy call - a your sales presentation. Your objective
call on one of our best customers, based is to get as much accurate information as
not on revenue but on friendship; one of possible from the customer. That
those frequent calls we make and get information should include:- Average
criticized for making because the sales volume of purchases on items being
volume doesn't justify the number of considered for consignment- Average
times we visit."He was a friend," the inventory of purchases on items being
young salesman thought. So he told him considered for consignment- Average
the story. His friend and customer was number of turns on items being considered
sympathetic, understanding and even for consignment- Average cost per
though he didn't offer any advice, the transaction (Customer generally doesn't
young salesman recaptured his spirit. know the answer to this one, but use
That night as he sat on his front porch whatever number he guesses. Industries
reflecting on the day, he thought, "Why average between $30 per transaction to as
not? Why not give him our product for high as $85 per transaction.)- Annual
free?" Full of excitement, the next average inventory write-offs- Cost of
morning he went directly to his boss, the cycle counting- Cost of annual physical
owner of the small privately held inventory including
company. He convinced the owner of the reconciliation- Number of stock outs per
integrity of his new plan.A concept was year and cost of a stock out
bornThe concept of consignment in steel If your customer can't answer these
distribution was born. That happened in questions, try to help them come up with
the mid 1980's. Consignment was already their best guesstimate before you resort
being used in the fastener industry but I to using industry estimates. The idea is
do not recall anybody in the steel that it is difficult for the customer to
distribution industry using it. But, as challenge a number that they
we, the young salesman and me, his boss, created.Consignment BenefitsConsignment
found out, the concept of consignment can benefits, pure and simple, equate to cost
work in any industry. It was a tough reductions. These cost reductions
sell, not so much to the customer, but to include:
me as his boss. But, we did it and it was - Reduction or redeployment of
successful. The prospect this young personnel- Reduction of transaction
salesman almost walked away from became costs- Reduction of handling
our largest account, purchasing over $4 costs- Reduction of insurance
million by the end of the second year. It costs- Reduction of inventory
became a learning experience for both of taxes- Vendor consolidations- Reduction
us and we both profited from it. And the of interest costs- Elimination of
large burly looking purchasing agent opportunity costs- Elimination of
actually did become one of the young stockoutsA primary objective of
salesman's closest friends.Consignment consignment is to reduce the customer's
can become a very effective marketing cost of carrying inventory. This includes
tool if it is used correctly. The the cost of money, shrinkage, taxes,
emphasis is on using it correctly. A handling and storage. Typically, these
consignment partnership should not be handling costs range from 18-30% of the
considered without establishing specific average inventory value.Additional
criteria for selecting appropriate benefits to the customer
accounts up front. This is extremely include:- Flexibilityo Material is always
important to you, the supplier. We call in stock at no cost until the material is
this selection criteria the "Rules of released for production. Quantities
Engagement."In contrast to the normal available can be altered to meet peak
Rules of Engagement in selling, demands as well as downturns.- Reduction
consignment Rules of Engagement are of dollar investment in
predetermined by the supplier, not the inventoryo Consignment partnership
customer. Of course, the rules can be provides an alternate use of capital and
modified with proper approval to fit customers will not be invoiced for
different situations. However, a material until released for production.
consignment partnership must be a win-win It also provides emergency safety stock
relationship in order to be for production with no inventory
successful.Rules of EngagementThe investment cost.- Shorter lead
specific criteria that need to be timeso Normal lead times would be
determined before a consignment approximately 1-2 days, however, the
partnership is offered include:- What is consignment partnership eliminates lead
the minimum annual sales volume you are time as material is always in stock and
willing to accept?- What are the minimum available at the customer's
annual gross margin dollars you are plant.- Assures growth
willing to accept?- Are financial opportunityo Consignment partnerships
statements available for your review?- Is provide the availability of consistent
the customer financially secure?- How quality. Quantities and pricing are not
much risk/investment are you willing to subject to restrictions based on changing
accept in off-site customer market conditions. Consignment
inventory?Answers to these preliminary partnerships enable us to effectively
questions need to be established in manage the supply chain, thus ensuring
addition to others that may pertain to the lowest total cost.- Pricingo Pricing
your product and industry.An Assessment will be consistent regardless of quantity
of the Consignment PartnershipEven today used. (No Extras) The price for one item
in many industries, consignment is on the is the same as the price for 100
leading edge of custom designed cost items.- Vendor reductiono Reducing the
reduction programs. Initiatives focus on number of vendors, consolidating sizes,
total cost, not price, in order to move parts, communication and administration
to the next level of partnering, can contribute to overall cost reductions
surpassing expensive JIT programs that - substantial reduction in debits and
have high administrative costs and credits.- Generalo The intent of this
service risks. program is designed to offer overall cost
The major objective of a consignment reductions, flexibility in scheduling,
partnership is to reduce costs by improved cash flow, reduction in
eliminating inventory and duplicate inventory and investment, assured growth
effort, as well as reducing shrinkage and opportunities and to enhance long-term
lowering transaction and handling costs. vendor relationships.This results in the
It is also effective in reducing scrap, true meaning of partnership, a win-win
rework, equipment downtime, lead-time and relationship. A customer may ask the
over production.As consignment becomes question, "How can you provide all these
recognized in the marketplace as the "way services without charging a substantial
of the future," caution should be premium on pricing?" The answer is
exercised due to the lack of experience simple. Consignment is a partnership that
and misconceptions by the provides benefits to both parties. Your
competition.Misconceptions include:1: benefits as a supplier include:- Locking
Consignment is a Supplier Program out competition- Better control of
Consignment does not start with a inventory- No warehouse space required
company/supplier seminar where you ask for growth- Regularly involved at
the customer how much he wants to stock customer location- First chance at new
on his floor. Consignment is complex, opportunities- Hard to cancel - hard to
requiring supplier professional duplicate- Customer becomes supplier
expertise, state of the art technological dependent- Free storage space at the
MIS and a true commitment of a joint customer's facility
partnership throughout both Happy Ending?We started this article in
organizations.2: Consignment is Just storybook fashion. Consignment may sound
Another Program/Project like the "Knight in Shining Armor," the
Because consignment is a total "Magic Bullet," or the answer to cracking
organizational philosophy on both the your toughest challenge. Be cautious. Not
customer's part and the supplier's part, every story has a happy ending. You can
implementation extends beyond the hurt yourself with consignment.
purchasing department. Consignment Consignment is a serious program that
requires organization, education and requires serious investment of assets and
training, especially with front line resources. Make sure you do your homework
supervision and labor on the shop in the beginning. Consignment is not
floor.3: Consignment is Easy and Can be right for every account. It should be the
Implemented Quickly exception, not the rule. But, if it's
Consignment is not easy although done right, it can be the "Knight in
consignment customers may think so. Shining Armor." So, if you've done your
However, you can make it easy because of homework and all the pieces fall into
your years of experience, expertise and place, go for it. And, when that
support from your IT department. purchasing agent says to you that he's
Consignment requires organizational happy with his current suppliers, don't
change and, in some cases, physical plant be afraid to look him in the eye and,
changes. Cultural transition barriers can without cracking a smile, reply very
extend the process. Sustaining the slowly..."Maybe that's because you have
continuous improvement philosophy of set your expectations way - too -
consignment is critically dependent on low!"Dr. Eric "Rick" Johnson () is the
organizational transition.Implementation founder of CEO Strategist LLC. an
of consignment requires a plan, an experienced based firm specializing in
implementation team, a commitment from leadership. CEO Strategist LLC. works in
both parties and staying power to build a an advisory capacity with company
partnership seeking continuous cost executives in board representation,
savings.How do you know if consignment is executive coaching, team coaching and
right for a particular account?First, education and training to make the
determine which accounts may or may not changes necessary to create or maintain
be eligible for consignment. At a competitive advantage. You can contact
minimum, you should consider the them by calling 352-750-0868, or visit
following:- Financial stability. Since for more information.Rick received an MBA
consignment involves the physical from Keller Graduate School in Chicago,
transfer of inventory to your customer's Illinois and a Bachelor's degree in
location before he has paid, you should Operations Management from Capital
be sure that he will remain solvent University, Columbus Ohio. Rick recently
throughout the program. Financial reports completed his dissertation on Strategic
are the preferred method of validating Leadership and received his Ph.D. He's
stability.- Minimum level of revenue also a published book author with four
desired. This needs to be determined to titles to his credit: "The Toolkit for
justify the investment not only of Improved Business Performance in
inventory, but of other resources to Wholesale Distribution," the NWFA & NAFCD
manage the program.- Minimum volume level "Roadmap", Lone Wolf-Lead Wolf-The
on items. The consignment program Evolution of Sales" and a fiction novel,
involves a level of overhead that may not "Shattered Innocence.




www.booksforsu.com keyword stats [2007-03-23-2007-03-23]


Other search phrases:

storybook land review best selling vhs
used books compare prices list of best selling video game
complete idiot`s guide to publishing all time best selling movie
new york best seller fiction new york tourist guide
xbox 360 prices at best buy children`s book guide
new york time review book review best seller list
sample book review lord of the flies chapter reviews
new york review of books childrens ipod nano prices at best buy
mac book reviews best buy match online prices
compare sales prices sports book review
1950 nonfiction best seller exile mountain bikes
best buy baby reviews best selling videos
what is the best selling video game





1- A- B- C- D- E- 2- 3- 4- 5- 6- 7- 8- 9- 10- 11- 12- 13- 14- 15- 16- 17- 18- 19- 20- 21- 22- 23- 24- 25- 26- 27- 28- 29- 30- 31- 32- 33- 34- 35- 36- 37- 38- 39- 40- 41- 42- 43- 44- 45-